The Art and Science of Determining Your Rent Price
DETERMINING RENT PRICE
Determining the value of your rental property involves part science, part art, and at times the strategies involved can feel like a chess game. There are several variables that affect pricing and audience expansion, and each should be considered carefully:
MARKET ANALYSIS: Analysis is based on square footage of the property, comparative rent price history for that area, and the value of real estate within that proximity. These combined factors reveal a low, median, and above market rent range that we use in determining rent price.
MARKET APPEAL: Another source that determines rent value is the product you provide to the rental audience. The preparation you put into setting the standard for your property has huge influence in pricing. Special features such as extra storage, large closet space, on-suite bathrooms, newer appliances, off-street parking, a spectacular view, etc. are impactful factors in deciding value as well.
PET POLICY: PET POLICY: In order to understand the scope of your decision regarding audience base, consider this: According to a 2017-2018 Humane Society of the United States (HSUS) survey, 68% of American households included at least one pet - see https://www.animalsheltering.org/page/pets-by-the-numbers. If you choose to have a “No Pet Policy,” you will be limiting your rental audience by 68% which may have an effect on the amount of time it will take to rent your property. There are no wrong answers, only preference and strategy.
PROPERTY LOCATION: There is no getting around it – location is another major factor in price determination. Your rental audience will pay a higher premium for the convenience of being in close proximity to parks, transit, restaurants, theaters, cafes, groceries, schools, etc.
SUPPLY AND DEMAND: Some neighborhoods in Portland are more popular than others – so much so that some people request to be on a waiting list for some Portland multiplexes. Lack of rental homes available will drive a higher rent value.
OBLIGATION & OBJECTIVE: Most properties have a mortgage attached, and some will have HOA fees involved. Taxes, insurance, repair, and maintenance will always be a part of your rental business, so it is imperative to understand the expenses that should be covered in order to profit from your investment. Also, will you prefer to aim for a higher rent price and risk the time it may take to fill the vacancy, or will you prefer to fill the vacancy quicker with a lower rent price and plan for a raise in rent later? Both are great strategies depending on your preference.
SEASONAL CYCLES: Every business is seasonal, and the rental real estate market is no exception. We recommend testing higher rent prices at the peak of the warmer season, not the wetter, colder part of the year. Portland can usually rely on beginning a peak season around mid-March and wrapping it up around mid-October. It’s vitally important to plan your rent price timing.
MARKET RESPONSE: The most important factor in rent pricing is – LISTEN TO YOUR RENTAL AUDIENCE. We can set any rent price, but the market will inevitably tell us what it actually should be. Be prepared to be flexible when necessary, and to discuss strategy depending on the activity level occurring while your property is on the market: number of showings, lack of response, and direct customer feedback will be the gauge that guides the response needed.
Your team at Real Property Management Solutions are experts in the industry and work hard to understand current market trends. We will work with you to best understand your goals and needs and bring our knowledge to the table to best assist in determining the most effective rental strategy